Pressure grows for PGE to shutter Boardman coal plant

Brent Wojahn/The OregonianWorkers take care of some routine maintenance on one of eight pulverizers inside the Boardman coal-fired power plant. The pulverizers reduce the coal, imported from Wyoming, to a fine dust before burning.After more than a year of analysis and public feedback, Oregon's largest utility unveiled a draft plan earlier this month. The company held a final public meeting Friday, mostly to discuss a few tweaks to its analysis and review a plan to build a new high-capacity transmission line across the Cascades.

But what attendees came to discuss was Boardman.

PGE's controversial proposal includes two new gas-fired power plants and the installation of more than a half billion dollars worth of pollution control equipment to keep the company's workhorse coal plant in northeast Oregon compliant with federal haze reduction rules while cranking out cheap electricity for the next three decades.

While required to keep the plant running, the pollution controls do nothing to reduce the plant's output of carbon dioxide, the main man-made culprit in global warming. Boardman, the state's only coal plant, is the largest stationary source of pollution and CO2 in Oregon.

Ratepayer and environmental advocates think the utility is squandering a golden opportunity to shut down the plant, while underestimating the risks of future carbon taxes on the plant's viability. PGE's analysis, they insist, shows that the utility could replace Boardman's output without a meaningful difference in reliability or cost.

Bottom line, the advocates believe it's too risky to invest $560 million in pollution controls and still face a possible early closure of the plant.

"It would normally be very difficult to justify shutting down a coal plant," said Steve Weiss, a policy analyst with the NW Energy Coalition, which represents renewable energy and conservation groups in the Pacific Northwest. "But when you're talking about having to put a half billion into it, it changes the equation. If they go forward and put all this money into the plant, they'll never close it down, and if they're forced to, it will cause a huge economic hardship."

In its draft analysis, PGE considered 15 different mixes of energy sources and tested them against a number of "what-if scenarios. Each portfolio garnered a weighted score. The company's preferred portfolio, which includes the investment to keep Boardman operating, is the one PGE deems to have the least combination of cost and risk.

On Wednesday, a coalition of ratepayer advocates and environmental groups sent PGE a letter urging the utility to evaluate shutting Boardman in 2020 rather than installing the pollution controls. A 2020 shutdown was the least-cost option that PGE presented to the Department of Environmental Quality last year when the agency was evaluating what controls PGE should be required to install.

The rules that DEQ eventually adopted, however, require PGE to either install successively higher levels of controls or shut the plant by 2011, 2014 or 2017. If it installs all the recommended controls, it can run the plant until 2040.

Jim Lobdell, PGE's vice president of power operations and resources strategy, said Friday that because the 2020 shutdown isn't allowed under the DEQ rules, the utility can't build that scenario into any recommendation to state regulators. But Lobdell said PGE would go ahead and run the analysis to see what it showed.

He cautioned, however, that it may not deliver the same result this time.

When PGE was evaluating the pollution controls, it was testing the projected cost of Boardman's output -- as a stand-alone plant -- against the price of power on the wholesale market. In a resource planning scenario, Lobdell said, Boardman would be part of a mix of resources until 2020, then would have to be replaced by a failsafe option like a natural gas plant, the price of which is likely to be higher than wholesale power prices.

Ratepayer groups believe PGE is overestimating the risk of natural-gas price volatility and underestimating the risk of stiffer carbon-emission taxes in the future. And they think there's still time to ask the DEQ to consider the 2020 shutdown option.

"If that's the least-cost future, we ought to see if we can get the EPA and the DEQ to reconsider their rules," said Bob Jenks, director of the Citizen's Utility Board of Oregon. "The worst outcome is to make the Boardman upgrades, then have to shut it down."

PGE's draft resource plan is open to public comment until Oct. 5. In early November, the company will submit a final copy of the plan to the Oregon Public Utility Commission, which will then conduct its evaluation of the plan.